System for facilitating life settlement transactions

ABSTRACT

A system and method for buying and selling life insurance policies includes an online database for storing information concerning in-force policies as needed for evaluation by a potential buyer. Owners of policies, either directly or through agents, who might be willing to sell their policies, register with the online website with critical financial and medical underwriting information relating to their policies, as needed for evaluation by a potential buyer. In the online database such information is organized and categorized as to parameters of various medical and financial information, to be reviewed online in an orderly manner by investors and potential buyers of policies. A membership preferably is required for a potential buyer to have access to the online information. In a preferred implementation of the system, an auction is held online to obtain essentially the best price for each policy.

CROSS-REFERENCES TO RELATED APPLICATIONS

This application is a continuation application of and claims priorityfrom U.S. Non-Provisional patent application Ser. No. 10/789,158, filedFeb. 27, 2004, the entire disclosures of these applications areincorporated herein by reference for all purposes.

BACKGROUND OF THE INVENTION

This invention concerns financial transactions, and specifically theinvention is directed at life settlements (or senior settlements) andviatical settlements (sometimes collectively referred to herein as lifesettlement transactions), and the creation of an efficient market insuch transactions.

With the AIDS epidemic that began in the 1980s, life settlementtransactions began to be seen as a useful tool for realizing liquidityfrom an existing, in-force life insurance policy during the insured'slifetime. AIDS victims facing inevitable and proximate death wereoffered cash for the transfer of their life insurance policies withbeneficiary and ownership rights transferring to the buyer. The buyerwould then make remaining premiums (if necessary) until the death of theinsured. This provided cash where none would otherwise be availableduring the lifetime of the insured, but only to a survivor. Viaticalsettlements refer to insureds with actuarial life expectancy of lessthan two years. Since the inception of viatical settlements, a newmarket in the form of senior settlements (or life settlements) hasdeveloped for the sale of policies with life expectancies of more thantwo years. Typically these policies insure seniors over the age of 65 orperhaps younger if the insured has health issues. Generally speaking,investors are looking for policies where the insured's life expectancyis less than 15 years. A growing market has arisen for the purchase andsale of life insurance policies in such life settlement transactions.

However, both viatical and life settlement markets have been essentiallyunregulated, and unconscionable commissions and profits have beengleaned from many life settlement and viatical settlement transactions.Many feel this to be the case in the majority of such transactions. Innearly all cases the policy owner selling a policy is not made aware ofthe actual price for which the policy is purchased, but only knows theamount he is paid. Brokers specializing in the purchase of lifepolicies, usually on behalf of investors such as large insurancecompanies, pension funds, etc., take a very large percentage of thepurchase price, often over 30%. In almost all cases there are otherlevels involved, such as agents who themselves take hefty commissions.The result is that the owner of the policy, usually the insured,receives a greatly reduced portion of the true value of the policy,perhaps only 50% to 60% of the true value. Normally the owner/insuredhas no idea of the true value of the policy. Because of theinconsistency in life insurance medical underwriting, the owner(insured) is often only given enough of the proceeds to pacify him.Often the agent will then show the client how to take the proceeds andpurchase either more insurance or the same amount of the coverage at alower annual premium.

Changes have been occurring in the insurance industry, particularly inthe United States. Life expectancy has increased considerably inrecently decades, and rates for life insurance, particularly terminsurance, have dropped a great deal. Additionally, insurance companiesprice their policies with the idea that 5 out of 6 of them will lapseand never pay a death benefit. This has the effect of driving down thecost of policies due to the retained earnings of paying less in claims.As a result, an insured holding an older policy (usually permanentinsurance, i.e. a “whole life”, or “universal life” policy) often findsthat he can obtain life insurance with a far higher death benefit thanunder his current insurance, by purchasing a new policy, without anyincrease in the premium being paid, or potentially a substantialdecrease. This situation presents a strong incentive for an insured toenter into a life settlement transaction, selling the existing policyand realizing a fairly large sum of money, which can then be used to buya permanent insurance policy with a far higher death benefit. Theinsured can also use the proceeds for other purposes.

This situation has caused a continually growing market in lifesettlement transactions. However, and unfortunately, the very largeprofits taken by brokers in these transactions has deprived policyowners of a fair value for the sale of their policies, and has actuallyhad a negative effect on the organized entry into this market by largeand reputable insurance companies. Being unregulated and having areputation as being run by profiteers, the market has caused manyinfluential and potentially beneficial buyers to shy away because ofpotential trouble and damage to reputation.

Accordingly, there has been a need for an efficient market for lifesettlement and viatical settlement transactions, a market which policyowners can enter with a fair degree of confidence that they will beobtaining a good and competitive value for their policies, andconsequently, a market where buyers of policies can avoid over-payingfor policies only to benefit the layers of profiteers that stand betweenthem and the seller.

BRIEF SUMMARY OF THE INVENTION

The invention addresses this need by providing an efficient marketplace,in the form of an online auction, for life settlement and viaticaltransactions. Instead of relying on specializing brokers who obtain thebest price from a buyer and the lowest payoff to the insured/seller,without disclosing the actual value of the policy to the seller, themarket established by the invention places all critical information,including personal, financial and medical underwriting informationrelating to the policy of each owner, in an online database for reviewby potential buyers. A pre-arranged membership preferably is requiredfor a potential buyer to have access to this online information, andmemberships may also be required of potential sellers of policies, oragents for those sellers. Steps may be taken to assure theconfidentiality of the personal, financial and medical informationrelating to an insured; for example, the insured's name, address andsocial security number may be omitted from the information contained inthe online database. Agents may be used to find life insurance policiesand to obtain the needed information regarding each policy, but theseagents are paid on a consistent commission basis, rather than paying theagent and a life settlement broker in the manner in which many haveprofiteered in the previous unregulated and disorganized market.Advertising directly to policy holders may also be used to obtainpolicies for potential sale.

As a corollary function of the internet website containing the database,a service may be provided for appraising in-force life insurancepolicies, once potential sellers have given the website access tocritical personal, financial and medical information regarding a policy.With the availability of such straightforward and realistic appraisals,the interest in placing policies on the auction database will increase.Additionally the site will track certain policies for insureds and/oragents in order to make sure they do not lapse prior to a time when theymight be sold.

The online auction itself is conducted in the following way:

The auction is held on a website, where policy owners, either directlyor through agents or other authorized parties, give the website accessto data relating to an in-force policy to be sold and an auction is heldonline for each policy that is put up for sale. The seller or agentspecifies the conditions, such as with or without reserve, reservemeaning that the policy is withheld from sale if a certain minimum bidis not obtained. The duration of the auction may be set by the websiteor, if permitted by the website, by the seller or agent (several days ortwo weeks might be typical). Normally the highest bid thus far willalways be displayed (“current bid”) so that potential buyers will submitonly bids that are higher than the previous high bid. However, anauction could be made via “blind bidding”, since there is sometimes apsychology in blind bidding that will produce a higher bid thanotherwise. The auction on a particular policy, normally at the decisionof the seller or agent, can specify a “buy it now” feature, whereby aprospective purchaser can avoid bidding against others by paying a “buyit now” price that is posted. A “sell it now” feature can also beoffered to the seller. The benefit would be to avoid paying anycommissions on the transaction. The “sell it now” feature is a fund setup by the site to purchase policies from its policy owners.

All data posted online can be anonymous if requested by the seller andsearchable by category, such as by death benefit, by age or range of ageof insured, by actuarial life expectancy of the insured, by percentageof cash valve as it relates to death benefits, by premiums as apercentage of death benefits, by health conditions, etc. All datarelating to an insured in a policy are entered into the database as thepolicy is posted, so that each policy can be found by a potentialbuyer's searching any of a number of different fields.

It is therefore among the objects of the invention to create an onlinecentral clearing system for life settlement and viatical settlementtransactions (“life settlement transactions”), to produce an efficientand central market that brings buyers and sellers directly together,eliminating high profits of middlemen and establishing a market wherepolicy holders can realize the highest price for their policies incompetitive and open bidding. These and other objects, advantages andfeatures of the invention will be apparent from the followingdescription of a preferred embodiment, considered along with theaccompanying drawings.

BRIEF DESCRIPTION OF THE DRAWINGS

FIG. 1 is a block diagram showing schematically the system in placeprior to this invention, for buying and selling insurance policies inlife settlement transactions and viatical transactions.

FIG. 2 is a block diagram outlining the system of the invention, with acentral auction site for bringing sellers and buyers together in lifesettlement and viatical transactions.

FIG. 3 is a diagram illustrating a home page or first operative page ofa website which forms a principal part of the invention.

FIG. 4 is a “buy a policy” page, which can be selected from the screenof FIG. 3 and which allows a prospective buyer to search for policiesaccording to selected criteria.

FIG. 5 is a schematic representation of a screen or page which will comeup after the user has entered appropriate search information.

FIG. 6 represents a sell policy screen which can be selected from thescreen of FIG. 3, and with provision for the user to make selections andenter information.

FIG. 7 is a representation of an “appraise a policy” screen that canalso be selective from the screen of FIG. 3.

FIG. 8 is a representation of a track a policy screen, another screenthat can be selected by the user from the screen of FIG. 3. Thisprovides screen a number of choices.

FIG. 9 represents a screen which will arise from a certain selection ismade from the screen in FIG. 8.

DETAILED DESCRIPTION OF THE INVENTION

FIG. 1 shows the system of the prior art, i.e., the typical transactionsand layers of parties involved in a life settlement or viaticaltransaction. In the drawing, sellers and representatives of sellers areshown below the dashed line 10. This includes, below the dashed line 12,policy owners or insureds themselves, indicated at 14. The policy ownersin the typical system prior to the invention would usually contact or becontacted by insurance agents indicated at 16, regarding the possibilityof sale of their in-force policies. The drawing indicates that insuranceagents engage in marketing efforts 18, and may have formed strategicalliances 20 with other companies that service seniors (such as otherinsurance products, annuities or prescriptions drugs) to enlist policyowners to sell their policies.

As indicated in the block diagram of FIG. 1, the other avenue for aninsured or policy holder to sell a policy is by a direct sale to abuyer, but this is virtually always through a life settlement broker.These direct sales constitute a small percentage of these transactions.

Under the currently existing (prior art) system, each insurance policytravels through life settlement and viatical brokers shown at A, B, Cand D above the dashed line 10 in the drawing. These life settlementbrokers, as discussed above, usually reap a very large piece of thepurchase price for the policy, approximately 20% to 30% of the faceamount. The brokers (A, B, C, D) have contacts with buyers, examplesbeing indicated in the drawing at 22, 24, 26 and 28. The brokers offerinsurance policies to one or several of these buyers/contacts. In somecases, a certain broker may deal exclusively with a certaininstitutional organization, such as an insurance company 22 or a pensionfund 24. The broker secures the best price he can for a given insurancepolicy. It should be noted that different buyers, particularlyinstitutions such as insurance companies, will view the financial,medical and personal history of an insured differently, just as someinsurance companies may find a particular person insurable, or insurableat a reasonable rate, while others will not, based on personal andmedical history. Potential buyers in life settlement transactions andviatical settlement transaction will also interpret the medical andpersonal histories differently. Some may find a much greater likelihoodof longer term survival of a certain insured than will others. Clearlythe others will pay more in a viatical or life settlement transaction.This is why a broker wants to offer a policy to a number of differentbuyer parties in seeking the best purchase price.

However, as explained above, the policy owners or insureds 14 do not seethis purchase price. They are simply told by an agent 16, or by a broker(A, B, C, D) in the case of dealing directly with such brokers, what theinsured will be paid for the policy. The agent or broker may initiallyindicate to the insured/policy owner a minimum he can obtain, or aprobable range, and the settlement transaction may not be completeduntil the insured or policy owner has a chance to see the price beingoffered, after the broker has dealt with the buyers to obtain the bestoffer at that end. As noted above, the policy owner may know the “cashsurrender value” of the policy, which is often referred to as ameasurement of the fair market value of the policy because it isavailable to the policy owner if needed. The life settlement or viaticaloffer is, of course, often considerably more than this “cash value”amount. Thus, the policy owner is likely to accept a lifesettlement/viatical transaction purchase which only pays the buyer 40%to 80% of what the policy is actually worth to the highest bidder. Notethat the agent 16, if involved, takes a commission as well, but this isusually a percentage pre-agreed with the broker, such as 4% to 6% of theface amount of the policy and not an unconscionable portion of the totalpurchase price as in the case of the broker.

FIG. 2 shows the system of the invention. Here, an Internet website 30acts as a central clearing house for purchase and sale of in-force lifeinsurance policies, in viatical settlements and life settlementtransactions; the website 30 receives information about policies thatmight be sold by the policy owners 32, provided an adequate return isrealized by the policy owner. This information includes anonymous andsearchable data, particularly financial, medical and personal dataconcerning the policy and the insured. Buyers will also have access to aPDF file of the medical records as well as an in-force illustration.Information from the medical records and in force policy is extractedand can be searched by category (as explained above) by authorizedbuyers who are members. These buyers, again, may include insurancecompanies 22, pension funds 24, private investors 26 and others 28,including foreign investors. These parties have pre-arranged membershipswith the website 30, and access to the policies in the website'sdatabase, using a password. This provides an efficient and centralauction site that brings buyers and sellers directly together. Therewill also be the capability to change the language of the text to assistforeign investors.

As indicated in the drawing, policy owners 32 may directly access thewebsite 30 (indicated at arrow 34), and a member may be required on thepolicy owner's side as well. In either event, the information on thewebsite fully discloses to the policy owner the nature of the lifesettlement transaction, and the nature of the auction which is proposedfor the owner's policy, with instructions as to how to give the companyaccess to the policy owner information in order to post the policy onthe website and in the database. The owner will be required to enter aname and contact information, but this will be kept confidential and notposted as part of the critical information that will be available topotential buyers.

As indicated in FIG. 2 and as noted above, the website 30, althoughaccessed in many cases directly by policy owners 32, may also beaccessed by insurance agents 38, acting on behalf of policy owners.These agents can directly provide policy owners information as justdiscussed, regarding the possibility of buying larger face valueinsurance policies using a lump sum received from a life settlement orviatical transaction, or paying for such insurance through othercreative planning options. Such information is important in giving thepolicy owner an understanding of the advantages that can be realized inmaking such a transaction and purchasing a greater amount of insurancewithout actual cost. The proceeds of the life settlement are taxableabove the basis (premiums paid). The amount above the basis can also bestructured to be tax-free under certain scenarios.

Strategic alliances 40 are shown in FIG. 2 as a way to drive morepolicies for potential sale to the site. These alliances would focus oncompanies that have products and services for seniors such as annuitiesand prescription drugs.

As explained above, the website 30 conducts auctions for each policy,although a group of policies could be auctioned together if such is seento provide an advantage. Steps in conducting the auction are discussedabove.

As also reviewed earlier, the website may include a “buy it now”feature, indicated at 42, similar to the auction offerings currentlymade on the eBay™ internet website.

FIG. 3 shows an example of a home page or the first operative page of awebsite, in one manner of implementing the invention. In this example,the web page has four columns, buy a policy 50, sell a policy 52,appraise a policy 54, and track your policy 56. In the buy a policyselection, provision for member login is at 58. This is optional. Memberlogin, based on pre-arranged membership in the website clearing vehicle,is preferred but may not be mandatory in all implementations of theinvention. As shown in FIG. 3, the buy a policy selection column or pagemay have selected links 60, 62, 64 for either advertisement or forimmediate review, such as large face amount policies that are for sale,“hot deals”, or viatical settlements shown at 64 (these policies havelife expectancy of two years or less). In addition, a link 66 may beincluded for ongoing policy auctions where only one day (or two days,etc.) is left until the auction ends. All policies listed in this column50 may in effect be paid-for advertising, with a charge to the policyowner or agent for the policy being entered into any of the links 60,62, 64, 66.

FIG. 4 shows an example of a “buy a policy” page which will be linked tothe home page. To arrive at this page, the user preferably clicks on a“go” button 68 shown in FIG. 3.

The “buy a policy” page provides search criteria for the potentialbuyer. As shown in the drawing, the user can check any or all of theboxes indicating joint life policies, single life policies, terminsurance, universal life, or whole life, and the user may specify maleor female, age criteria and face amount, health status, life expectancy,cash value as a percentage of face amount, and premiums due as apercentage of face amount. Life expectancy as a search criterion will beavailable to search and find those policies where a life expectancyappraisal has been made by the system. The user will be advised thatmaking a selection on this criterion may exclude a number of policiesfrom review.

FIG. 4 also indicates a “browse all” box 70 that can be selected. Thiswill bring up a plurality of policies, based on system-set criteria asto the order such policies will appear on the page. The system can useas a preference the amount of time left in the auction for the policies,so that the shortest-time policies will appear at the top of the screen.

FIG. 5 shows an example of a screen that might appear after entry of allthe criteria discussed relative to FIG. 4, or simply with the “browseall” choice 70 selected. In the latter event, the system will bring up anumber of successive pages of policies that are up for sale, withoutregard to such criterion as the type of insurance, face amount, cashvalue, health status, etc. This will enable the user to browse through alarge number of policies offered for sale, and to quickly comparecurrent bid 72 to total face amount 74, appraised value 76 (if thesystem has appraised the policy), life expectancy 78, percent of cashvalue to face amount 80, percent of premium to face amount 82, or othervalues or data relating to the policy. At any time in the browsing ofthese pages the user can click on any of the criteria 72-82 and thesystem will then reorganize all of the listed policies on the basis ofthe criterion selected. The site can be operative to reverse the order(e.g., highest numbers down to smallest numbers, rather than smallestnumbers down to highest numbers) if the same criterion is clicked twice.

If, rather than using the “browse all” link 70 in FIG. 4, the user hasfirst entered some or all of the search criteria from the list in FIG.4, then only those policies that fit the criteria selected will bedisplayed. Again, the system can have a default setting so as to displaythe list of policies based on the nearest in time for auction expirationdown to the longest time, as discussed earlier. Then, the user can usethe criteria 72-82 in the manner described above, to re-sort the listedpolicies in any manner desired. If the potential buyer selects a policyfor purchase, the buyer can make a bid as indicated at 84. Because ofthe large amount of money involved in these auctions (sometimes millionsof dollars), the website and the system of the invention will notifybuyers and sellers that all sales are subject to verification by thebuyer with regard to the information provided on the website. However,if a member/buyer creates a history of failing to go through with agreedpurchases, that member can be subject to loss of membership, and denialof further access to the system.

The second column 52 in FIG. 3 is “sell a policy”. An example of a webpage for this purpose is shown in FIG. 6. As shown in FIG. 3 the user,who typically is an agent, preferably is required to log in as indicatedat 86. The “sell a policy” column 52 also has provision for individuals,who are not agents, by clicking at a link 88. The individual user willthen be presented with membership information if the user is not amember, or, in another implementation of the system, individuals are notrequired to be members, in the interest of obtaining more policies forsale on the site.

The link 90 shown in the “sell a policy” column goes to another page tosign a user up for membership, which is preferably required at least foragents.

The “sell a policy” column 52 may also include a link which can becharacterized as “show me how viatical/life settlements work” 92. Thiswill bring up a page or pages (not shown) that demonstrate for apotential policy seller the positive economics of selling a policy,obtaining a relatively large lump sum payment, and the uses to whichthat payment can be made to obtain a greater amount of coverage. Severalexamples, for different situations, can be presented.

The column 52 also has links for agents, at 92 and 94. These linksenable agent/users to review all policies represented by the agent inthe system, including those policies now in an active auction, thosewhich are being appraised or have been appraised, and those which arebeing tracked, not currently for sale but which may reach a point ofoptimum timing for a sale. The link 94 enables the agent to enter a newpolicy, either for tracking, or for appraisal or auction.

The “sell a policy” column 52 can also include a link 96 that lets theagent or individual review any auctions of the policies represented bythe agent or individual. This will bring up FIG. 5, with only thosepolicy auctions of the agent or individual being shown.

FIG. 6, the “sell a policy” page, comes up when the user has entered thedesired information in the column 52 and clicks on a “continue” buttonsuch as “go” 98 as indicated. The “sell a policy” page has a link 100 tosubmit a new policy, and 102 to enable tracking of current auctionswhere the user represents the policies or owns the policy. Again, thatwill bring up the screen of FIG. 5.

First, the agent or individual indicates the state in which the insuredis located. This prompts the system to provide the regulatoryinformation and forms needed to sell a policy, based on the residence ofthe insured. These users can choose to call in or to receive these bymail, by e-mail or fax, or they may be provided online, on the website(if allowed by the state) for the user to enter information while on thesite.

FIG. 6 also shows that the individual or agent will be prompted to enterpersonal information such as date of birth, name and address and contactinformation. The forms mentioned above are primarily consent forms thatenable personnel in the system to obtain critical medical and policyinformation concerning the policy that is to be sold. This information,in detail, will be entered into the database of the system andretrievable by authorized potential buyers as noted in FIG. 5, at 83(medical records) and 85 (in-force illustration). FIG. 5 shows that thepotential buyer can review the insured's medical records, in a formatsuch as PDF, and can review a current in-force illustration for thepolicy. Preferably the potential buyer can request to see a modifiedin-force illustration based on a change in one or more of theparameters, such as the duration or amount of premium that the buyerwould want to commit after he purchases the policy. This information maybe delayed, as it may involve required authorization to obtain themodified in-force illustration.

The bottom of FIG. 6 shows options for the potential seller to seeproprietary techniques, i.e. examples of how a viatical or lifesettlement can be advantageous to the seller; or to see a demonstrationof how the policy might be sold and replaced with a new, higher facevalue policy. This can be achieved by incorporating a computer programthat first appraises a current value for life settlement and then has aninput screen for the current premiums being paid. A new quote for apolicy of the same death benefit is run and if the proceeds from thesale of the policy combined with an ongoing premium are moreadvantageous than the current policy, a “swap” is recommended as in FIG.9. There may be a link for a “sell it now” offer, such as indicated(“give me an offer right now”). This gives the policy owner the optionto obtain a payment for a policy without being subject to the risk ofthe auction, and without all commissions that are payable if the auctionis completed. In this case the buyer will be the online database system,which can have a fund set up for purchases of policies without auction.

The bottom of FIG. 6 also shows links which preferably are included, toinitiate tracking of an owner or agent's policy, with notification bythe site (e.g., e-mail) when an optimal time arises to sell the policy,or to obtain an appraisal of a policy. These links will connect the userto the columns 56 and 54 in FIG. 3, the home page or first operationalpage of the site.

In FIG. 3 the “appraise a policy” column 54 preferably includes an agentmember log on 100 and an individual indicator 102. Once one of these isselected and the information entered, a screen such as shown in FIG. 7appears, “appraise a policy”. This page enables a user to view one ormore policies that have already been appraised, or to order a formalappraisal of a policy. This formal appraisal may be provided withoutcharge, provided the client signs the required forms and meets certaincriteria as to being a probable candidate for a life settlement orviatical transaction. FIG. 7 also shows a preferred feature whereby auser may obtain an informal appraisal, by entering basic information asindicated directly on the screen. These can include drop-down screens,with health standards that are well known and used in the insuranceindustry in the event an agent is entering information. These healthstandards range from a preferred status for a potential insured downthrough typically nine different tables, to a “decline” status. If anindividual, such as a policy owner, is using the site, a differentdrop-down screen can be used for general information. This is only toprovide an informal appraisal. The individual will be prompted to enterpremiums, face value, etc., and cash value if known. The system willthen automatically calculate, based on history and a database oftransactions that have been completed, a rough estimate or approximaterange of prices that might be obtained for the individual for theparticular policy.

Returning to FIG. 3, the column 56 shows the option “track your policy”.Here again, the agent normally is required to log in. Insurance brokerscan also log in, at 105, and individuals can indicate status at 102. Anexample of a “track your policy” page is shown in FIG. 8. The drawingshows a list of services that can be provided to agents or individualowners. The purpose of the services is to keep a policy in good standingand to obtain a good price for the policy when an optimum time occurs tosell the policy. Thus, the list includes “don't let it lapse”, which maybe a service to make required premium payments in the event the policyowner forgets or is unable to make the premium payments. The premiumpayments might be made from funds deposited by the insured, such a fundbearing interest, or from another account of the insured, from which thesystem is authorized to withdraw needed funds for premiums. Thisprovides added protection against losing a policy, for a person who hasgone on the website and knows that a viatical or life settlementtransaction may be a good option in the future. Other features are“remind me to pay premium”, which can be via e-mail or regular mail, orother means, and “notify me when it is time to sell” which is based onthe site's continual evaluation of the policy such as occurs when onechooses the “swap my policy” option shown in FIG. 8 and also FIG. 9. The“swap my policy” button is a link to an agent or broker who might beable to offer the user a better insurance policy, regardless of whethera life settlement transaction is involved. Other choices are “purchasemy policy now” (or “sell now”), discussed above, “appraise my policy”,also discussed above and “order in-force illustrations”. This latterchoice will bring up a screen with a consent form in the case of anindividual, consenting to allow an agent or broker to obtain thein-force illustrations, or, if the user is an agent for the policyinvolved, the consent form is not needed.

The bottom of the screen of FIG. 8 is for agents only. This can enablethe agents to order software via the site, to track policies handled bythe agent, the software being capable of communication with the site.This can be a tool of efficiency for agents to deal with the site, witha large number of policies. The other choice for agents is to enable theagent to upload policy information, using software such as has beenordered via the choice above. Preferably the site includes softwaredesigned to communicate with existing programs used by agents fortracking their policies, such as Goldmine, for example.

FIG. 9 shows the “swap my policy” feature. Here, a potential seller canenter minimal information, on a policy which is not already in thesystem. As noted, these include age, sex, height, weight, and healthstatus. They can be entered with a pull-down screen or window thatenables the user to select from a number of different choices. This canbe the manner in which the other choices function, as well. The user ofthe system can then either select “show current appraised value” or“calculate the appraised value”. The former is only for the case wherethe user's policy data is already in the system, and is part of thetracking described in FIG. 8. The option to calculate appraised valuewill give an approximate range of values for the policy based on theinformation entered by the user, for policies that are not already inthe system. As seen in FIG. 9, the user is also prompted to enter hiscurrent annual premiums, the number of years premiums are due, and theface amount of the policy. The calculation of the approximate value isthen done automatically, and in an output screen, as indicated in thedrawing, the system algorithms will indicate the annual savings thatcould be realized by selling the policy for the approximate value andpurchasing a new policy. This output is based on algorithms which havecurrently been used by life settlement brokers A, B, C, and D in FIG. 1,for calculating and approximate current value of an in force policy. Itis based on not only information such as shown in the upper part of FIG.9, but also more detailed medical information, input after review ofcritical medical and personal information of the insured, including areview of actual medical records. The calculation is also based ontypical algorithms used by insurance underwriters to determine thepremiums for a new insurance policy based on personal and medicalhistory, etc. With the use of these two types of algorithms, thesoftware of the system can automatically make a comparison of currentpremiums with a new policy, with the same face amount or a higher faceamount for the policy, etc., and display this to a user who wants toexplore selling his policy. Note that in FIG. 8, the option “notify mewhen it's time to sell”, can be an automatic calculation based on theabove description, with the two types of algorithms in the system. Theconclusion that the time is right to sell a policy being tracked isbased on economic advantage of the policy holder in the event of suchsale and “swapping” of a policy for a new policy.

The online website auction of the invention provides a far moreefficient system for buyers and sellers in viatical and life settlementtransactions. This will promote a higher price to the seller,approaching the fair market value for the transaction, and it will alsoaid the buyer to avoid paying too much for a particular policy.

The above described preferred embodiments are intended to illustrate theprinciples of the invention, but not to limit its scope. Otherembodiments and variations to these preferred embodiments will beapparent to those skilled in the art and may be made without departingfrom the spirit and scope of the invention as defined in the followingclaims.

1. A computer-implemented method for buying and selling in-force lifeinsurance policies including a computer that supports operations of awebsite comprising at least a web-based interface, wherein access to atleast one portion of the web-based interface is limited toadministrators and authorized buyers or buyer representatives, and adatabase having therein information concerning a plurality of in-forcelife insurance policies each being a life insurance policy on an insuredindividual, the method comprising: locating, using the web-basedinterface, from among the plurality of in-force policies stored in thedatabase, those in-force policies whose current policy owners arewilling to entertain offers from potential buyers to buy the policy fromthat current policy owner; obtaining, via the web-based interface,financial and medical underwriting information about the in-forcepolicies from their current policy owners, as needed, and storing it inthe database for evaluation by the potential buyers; categorizing thefinancial and medical underwriting information electronically so as toallow queries on the database, based on one or more category, to createa listing of in-force policies being tracked that are available forsale, by some query criteria, for review by the potential buyers,wherein the query criteria includes at least results of a lifeexpectancy report and medical underwriting data stored in the database,the medical underwriting data relating to insured individuals insured inthose policies, in response to user interaction with the web-basedinterface, filtering offered policies at least based on life expectancyreport data and medical underwriting data for those offered policies;tracking membership records so that access to at least a buyer portionof the database is limited to potential buyers who are represented inthose membership records; and coordinating auctions between potentialbuyers of policies and the current policy owners of those policies ortheir representatives.
 2. The method of claim 1, wherein, for at leastsome of the plurality of in-force policies, the current policy owner isthe same person as the insured individual.
 3. The method of claim 1,wherein, for at least some of the plurality of in-force policies, thecurrent policy owner is a different person than the insured individual.4. The method of claim 1, further comprising granting access, via theweb-based interface, to the database to a potential seller or an agentof the potential seller based on verification of a current membershiprecord.
 5. The method of claim 1, further comprising: identifying, fromthe database via the computer, potential sellers of in-force lifeinsurance policies owned by those potential sellers; and generatingelectronic messages that would be sent to these sellers, or that wouldtrigger a message to these sellers, advising them of an opportunity tosell.
 6. The method of claim 1, wherein information concerning eachin-force life insurance policy includes personal information of aninsured individual named on that in-force life insurance policy.
 7. Themethod of claim 1, wherein the database is implemented in an on-lineenvironment including a website.
 8. The method of claim 7, furthercomprising holding an auction, using the web-based interface, for atleast some of the in-force polices.
 9. The method of claim 7, furthercomprising appraising, via the web-based interface, the in-forcepolicies using an automated appraisal service.
 10. The method of claim7, further comprising providing the potential buyers access, via theweb-based interface, to the financial and medical underwritinginformation on the insured individuals named on the in-force policiespresented, based on authorization by the owner or an agent of the owneror the named insured individual.
 11. The method of claim 7, furthercomprising sending an email, by the computer, to the potential buyerswhen one or more of the in-force policies meets one or more criteria,wherein an email address and the criteria are inputted into the databaseby the potential buyers.
 12. The method of claim 7, further comprisingtracking, by the web based interface, a particular in-force policy atthe request of the owner or owner's agent.
 13. The method of claim 12,wherein tracking the in-force policy includes issuing reminders to thein-force policy owner or the owner's agent to pay premiums for thein-force policy.
 14. The method of claim 12, wherein tracking thein-force policy includes notifying the in-force policy owner or theowner's agent about a point in time when it would be advantageous tosell the in-force policy in a life settlement transaction.
 15. Themethod of claim 12, wherein tracking the in-force policy comprises:allowing the in-force policy owner or the owner's agent to enterinformation into the web-based interface about the owner's in-forcepolicy; calculating, by the computer, an approximate face value of thein-force policy; and displaying, on the web-based interface, potentialsavings in premiums realized by selling the in-force policy for thecalculated face value and buying a new policy with more advantageousterms than the in-force policy that can be sold.
 16. The method of claim15, wherein the new policy is a policy with higher benefits than thein-force policy.
 17. The method of claim 15, wherein the new policy is apolicy with lower payments than the in-force policy.
 18. The method ofclaim 1, further comprising establishing a fund to purchase policiesfrom current policy owners on terms specified by those current policyowners.